MELBOURNE (Reuters) - Australia will commit A$100 million ($79.7 million) to secure private investment in greenfield mineral exploration across the country to drive a new wave of discoveries and restart the flagging mining sector in its west.
The resource-rich state of Western Australia was at the forefront of a once-in-a-century mining boom during the first decade of the 2000s and into the start of this decade, but has become the country’s worst-performing economy. The poor economic outlook and gripes over the national distribution of taxes saw the state’s opposition this week discuss a “WAxit” option to break from the Commonwealth of Australia.
Speaking at a Western Australian Liberal Party conference in the state’s capital of Perth on Saturday, Prime Minister Malcolm Turnbull announced new tax incentives for junior exploration companies in a move he said would encourage investment and “risk taking”.
Turnbull said the new Junior Mineral Exploration Tax Credit (JMETC) would allow the tax losses in greenfield exploration companies to be distributed as a credit to Australian resident shareholders.
“These tax incentives will encourage ‘junior explorers’ to take risks and to have a go at discovering the next large-scale mineral deposit,” the prime minister said.
“We want to back enterprise. We want to turn around the greenfields minerals exploration expenditure that has declined by almost 70 percent over the past five years.”
Under the scheme, Australian resident investors of junior explorer companies will receive a tax credit where the exploration company chooses to give up a portion of their losses relating to their greenfields exploration expenditure in an income year.
Australia’s Resource Minister Barnaby Joyce said the credit would make it more financially attractive for mineral explorers to find resources in untapped regions.
“Despite good prospects, Australia has not had a world-class mineral discovery in more than twenty years,” the deputy prime minister said.
Only newly-issued shares relating to capital raising for investment in new greenfields exploration activity will be eligible for these tax credits.
Reporting by Joseph Hinchliffe; Editing by Jacqueline Wong